Canadian dividend investors have plenty of compelling options on the TSX right now. These three picks stand out for their rock-solid payout histories and sustainable cash flows supporting ongoing income.
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Fortis
In terms of top dividend stocks I continue to come back to, Fortis (TSX: FTS) remains one of my top picks for long-term investors seeking durable (and growing) passive income over time.
Indeed, if you’re hunting for a dividend aristocrat that won’t keep you up at night, Fortis is your go-to utility powerhouse. With 52 straight years of dividend hikes, this company’s mid-single-digit dividend growth rate is worth considering. Impressively, this dividend growth hasn’t hurt Fortis’ underlying payout ratio, which remains stable in the 70% range.
With a forward yield around 3.3% (lower due to the strong capital appreciation Fortis has seen of late), I think the company’s strong cash flow growth profiled driven by a regulated rate base growing 6% to 7% annually is worth considering. Residential and commercial customers will need to continue to pay their bills, and those bills are rising (thanks to AI). What this should mean is that Fortis’ long-term outlook is likely to look even better over time, making this a top defensive dividend stock I’m considering right now.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is an undervalued stock I think long-term investors would do well to consider right now.
Trading at 19 times earnings, Canadian Natural has also delivered strong total returns in recent years, with a stock price chart that’s very nice to look at.
Indeed, at this valuation it may be hard to comprehend that CNQ stock could carry a 3.9% dividend yield. It does, supported by 25 years of consecutive increases and five-year dividend growth of more than 20%. For those looking for top-tier exposure to the energy sector (and with oil prices on the rise right now, that’s a thesis that makes sense), Canadian Natural is a top way I’d play this trend.
Canadian Natural’s massive reserves in oil sands, conventional crude, and natgas drive 18% five-year revenue growth projections. Importantly, this is a company with low-cost operations yielding fat free cash flow for buybacks and hikes. Strategic acquisitions and drilling keep output rising amid global energy needs. Right now, with oil steady and export pipes expanding, this giant’s fundamentals scream buy. Indeed, I think now is the time for investors to load up on CNQ stock for that income stream which grows with crude prices.
Nutrien
Last on this list of top stocks to consider is an undervalued growth stock I think can ride the commodity bull cycle much higher, Nutrien (TSX: NTR).
Shares of NTR stock have been on the rise of late, thanks to strengthening commodity prices. As a key potash producer, Nutrien stands as a key beneficiary of long-term growth driven by rising food demand globally.
At a dirt-cheap forward multiple of just 12 times earnings, with a dividend yield of 2.9% and solid underlying fundamentals, there’s definitely a defensive story here. That said, I think the company’s long-term growth prospects are relatively overlooked by market participants right now.
As the world’s top potash producer, Nutrien benefits from food demand tailwinds, boasting solid balance sheet strength and cash flows for dividends plus share repurchases. Analysts see earnings growth continuing as this commodity cycle churns on. Thus, I think right now is the ideal time to scoop shares trading below peers’.
